- Net revenue 2016 up 8 per cent, to €2,389 million
- Operating cost growth of only 1 per cent due to ongoing efficiency enhancements
- Net income growth of 14 per cent at the upper end of the forecast range
- €4.34 adjusted earnings per share
- Proposed dividend increase, to €2.35 per share
- Net income for 2017 expected to grow by a further 10 to 15 per cent
Deutsche Börse AG published its preliminary results for Q4 and the financial year 2016 on Wednesday. The company generated net revenue of €2,388.7 million in the full year, an 8 per cent increase compared to the previous year (2015: €2,220.3 million). In particular, business development in the Eurex segment as well as Group-wide performance during the fourth quarter contributed to the increase; Q4 net revenue reached the highest level since 2008. Adjusted operating costs of €1,174.2 million were only slightly higher year-on-year (2015: €1,158.4 million), in spite of consolidation effects. This was largely due to ongoing enhancements of operating efficiency. Adjusted net profit for the period attributable to Deutsche Börse AG shareholders (referred to as “net income” below) stood at €810.8 million, up 14 per cent on the previous year (2015: €712.1 million). Basic earnings per share, adjusted for non-recurring effects, amounted to €4.34 (2015: €3.85).
The Executive Board of Deutsche Börse AG proposes to increase the dividend for the financial year 2016 to €2.35 per share (2015: €2.25 per share). The dividend proposal is equivalent to a distribution ratio of 54 per cent of adjusted net income, and thus within the range set by Deutsche Börse Group's dividend policy of between 40 and 60 per cent. The dividend still requires formal approval by the Supervisory Board of Deutsche Börse AG (which has already expressed its support), and by Deutsche Börse AG's shareholders, at the Annual General Meeting on 17 May 2017.
Carsten Kengeter, CEO of Deutsche Börse AG, commented on the financial year under review: “In addition to progress made with the planned merger with London Stock Exchange Group, we continued to consistently implement our ‘Accelerate’ growth strategy during 2016. In this context, we launched numerous new growth initiatives, further optimised our portfolio of projects and investments, and positioned the Group more client-centric. With this, we reached the upper end of our profit forecast range.”
Gregor Pottmeyer, CFO of Deutsche Börse AG, added: “Our ongoing measures to enhance operating efficiency have shown their full effect during the financial year under review. Accordingly, costs rose less strongly than net revenue – delivering a major contribution to earnings growth. We will continue to improve operating efficiency in 2017. Moreover, we envisage making progress in our structural growth initiatives and anticipate further improvements in the cyclical environment. Hence, for the current year, we once again project net income growth of between 10 and 15 per cent for Deutsche Börse Group, on a stand-alone basis.”
Preliminary results for 2016
Deutsche Börse Group’s consolidated net revenue rose by 8 per cent during the financial year 2016, to €2,388.7 million (2015: €2,220.3 million). The Eurex segment made a particular contribution to this increase, thanks to considerable growth in the commodities business, higher index derivatives volumes, and the consolidation of 360T in the fourth quarter of 2015. The Clearstream and Market Data + Services (MD+S) segments also posted higher results, with single-digit growth rates. Net interest income – which forms part of net revenue in the Clearstream and Eurex segments – also showed a marked increase of 66 per cent, to €84.0 million (2015: €50.6 million), mainly driven by higher interest rates on US dollar deposits.
At €1,317.4 million, operating costs were up 3 per cent year-on-year (2015: €1,283.2 million). Non-recurring effects of €143.2 million (2015: €124.8 million) were largely attributable to costs for business combinations. Adjusted for these non-recurring effects, costs increased only slightly, despite consolidation effects, to €1,174.2 million (2015: €1,158.4 million).
The result from equity investments amounted to €36.9 million (2015: €–1.5 million). The marked increase was mainly due to non-recurring income recognised in connection with the disposal of shares in BATS Global Markets, Inc. during the fourth quarter of 2016. Adjusted for non-recurring effects, the result from equity investments stood at €5.7 million (2015: €2.7 million).
Deutsche Börse Group’s earnings before interest and taxes (EBIT) rose to €1,108.2 million for the year under review (2015: €935.6 million), reflecting higher net revenue with only slightly higher operating costs. Excluding the non-recurring effects described, Group EBIT amounted to €1,220.2 million (2015: €1,064.6 million) – a 15 per cent year-on-year increase.
The Group’s financial result was €–74.6 million (2015: €–57.5 million). The decrease was primarily due to a positive currency translation effect of €18.1 million during the first quarter of 2015.
The Group’s effective tax rate for 2016 was 27.7 per cent (2015: 26.1 per cent); adjusted for non-recurring effects, it stood at 27.0 per cent, as expected (2015: 25.9 per cent).
Accordingly, consolidated net profit for the period totalled €722.1 million (2015: €613.3 million); excluding the non-recurring effects described above, it was €810.8 million (2015: €712.1 million).
Basic earnings per share, based on a weighted average of 186.8 million shares, amounted to €3.87 (2015: €3.31, based on an average of 185.0 million shares). Excluding non-recurring effects, basic earnings per share stood at €4.34, up 13 per cent year-on-year (2015: €3.85).
Preliminary results for Q4/2016
Net revenue for the fourth quarter of 2016 rose considerably compared to the same quarter of the previous year by 12 per cent to €619.0 million (Q4/2015: €553.5 million). The impact of the weaker environment on European cash markets was clearly more than offset by the commodities and interest rate derivatives business in the Eurex segment, the international business in the Clearstream segment, and the index business in the MD+S segment. Net interest income from the banking business rose markedly, to €22.0 million (Q4/2015: €14.2 million). This increase was largely attributable to the increase in US interest rates, and to the fact that the Group passed on negative interest rates (plus a spread) on deposits.
At €385.2 million, operating costs were down year-on-year (Q4/2015: €407.1 million). Amongst other factors, the decline was due to structural efficiency measures which the Group has been implementing since 2015, as well as non-recurring effects in the previous year. In the fourth quarter 2016, non-recurring effects totalled €42.3 million (Q4/2015: €73.2 million) and largely included costs related to the planned merger with the London Stock Exchange Group, as well as costs for the integration or disposal of subsidiaries. Adjusted for these non-recurring effects, costs rose by 3 per cent year-on-year, to €342.9 million (Q4/2015: €333.9 million), primarily due to higher variable remuneration.
The result from equity investments for the fourth quarter amounted to €37.5 million (Q4/2015: €–4.5 million), reflecting the sale of shares in BATS Global Markets, Inc. Adjusted for this non-recurring effect, the result from equity investments stood at €0.2 million (Q4/2015: €–0.2 million).
Deutsche Börse Group's earnings before interest and taxes (EBIT) was €271.3 million for the quarter under review (Q4/2015: €141.9 million). Excluding the non-recurring effects set out above, consolidated EBIT amounted to €276.3 million, a 26 per cent increase compared to the previous year's figure (Q4/2015: €219.4 million).
The Group's financial result was €–19.2 million (Q4/2015: €–16.9 million). The Group's adjusted effective tax rate of 27.2 per cent for the fourth quarter was in line with expectations (Q4/2015: 25.9 per cent). Accordingly, net income was €170.0 million (Q4/2015: €88.7 million); excluding the non-recurring effects described above, it was €180.3 million (Q4/2015: €146.5 million). Basic earnings per share, based on a weighted average of 186.8 million shares, amounted to €0.91 (Q4/2015: €0.47). Adjusted for non-recurring effects, basic earnings per share stood at €0.97 (Q4/2015: €0.78) – an increase of 24 per cent.
Please find Deutsche Börse’s consolidated income statement, segment reporting, and an overview on the guidance for 2017 in the appendix to this release.